In Polo/Lauren Company LP v Ziliani Holdings Pty Ltd ( FCAFC 195, December 18 2008), the Full Court of the Federal Court of Australia has held that Ziliani Holdings Pty Ltd was entitled, without Polo/Lauren Company LP’s consent, to import into and sell in Australia genuine Polo Ralph Lauren garments which had lawfully been embroidered overseas with the well-known polo player logo.
Polo/Lauren argued that Ziliani, a discount clothing retailer, had infringed its copyright in the logo, an artistic work, by importing for sale and selling garments bearing the polo player logo without its consent. Polo/Lauren claimed that Ziliani knew or would have known that the manufacture of those garments in Australia would have infringed Polo/Lauren’s copyright, in contravention of Sections 37 and 38 of the Copyright Act 1968 (Cth). Polo/Lauren sought:
- an account of profits; and
- orders to restrain Ziliani’s allegedly infringing conduct.
Ziliani contended that it had a defence under Section 44(C) of the act, which was introduced in 1998. Section 44(C) provides that copyright is not infringed where a copyright work is embodied in a non-infringing accessory to an article which is imported with that article. A non-infringing accessory must be made with the authorization of the copyright owner in a Berne Convention
or World Trade Organization
country. The act defines 'accessory' as including a label incorporated into the surface of an article - a description which, according to Ziliani, applied to the polo player logo. Ziliani also relied on the defence in the design/copyright overlap provisions of the act, which provides that copyright is not infringed where a “corresponding design” (ie, the visual features of shape or configuration of an artistic work) is embodied in a product, resulting in a reproduction of that work (Section 77). Ziliani argued that the logo was “embodied” in the garments, as embodiment can include a design being woven into, impressed on or worked into the product (Section 74).
The court upheld the first instance decision that the polo player logo was a label because:
- garments may have multiple labels, including swing tags, internal tags and labels such as the polo player logo;
- the logo was conceptually distinct from the garments into which it was incorporated and had its own identity as a label;
- the logo was not purely decorative and did perform the characteristic 'identification' function of a label - namely, in this case, to connect the garments with Polo Ralph Lauren; and
- an accessory such as a label can contain a trademark and, if that trademark is a copyright work, the copyright work is being used as a label.
Accordingly, the polo player logo was found to be a non-infringing accessory to an article. Ziliani had thus not infringed Polo/Lauren’s copyright by importing garments bearing the logo.
In obiter, the court considered whether Ziliani had a defence under Section 77 of the act. While the trial judge held that the logo was sufficiently three-dimensional to constitute a corresponding design and establish Ziliani’s defence, the court found that the garments did not “embody” the logo in the relevant sense. Given the background of the design/copyright overlap provisions, the court found that 'embody' did not mean “include as a constituent element”, such as the logo being applied to a small section of the garment, but, on the contrary, meant “give a material or discernible form to an abstract principle or concept”. The court declined to comment on whether the logo at issue was three-dimensional. The court indicated that its view was that the lack of “embodiment” would have led it to find that Ziliani had no defence to infringement under Section 77.
While copyright law was once a primary avenue to prevent the parallel importation of genuine goods into Australia, this case highlights the difficulties faced by brand owners since the amendments to the act in 1998 relating to non-infringing accessories. Lawyers for brand owners are now constructing increasingly creative arguments in an attempt to circumvent the harsh effects of the amendments. This decision demonstrates that the breadth of the amendments makes it almost impossible for brand owners to use the act to guarantee exclusivity for their distributors in Australia.
Jennifer Wrigley and Stephen Stern, Corrs, Melbourne